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Summer Fuel Prices Far Lower Than Expected
With temperatures warming up across the country, many drivers are bracing for the inevitable rise in gasoline prices that accompanies the summer traveling season. Traditionally, far more Americans take to the nations highways on vacation during the fair weather months, and this increased fuel demand has almost always been accompanied by a significant spike in fuel costs. The most extreme example occurred in 2008, when per-gallon pricing jumped above the $4 dollar mark due to a combination of global economic and political factors.
2009, which has so far not given drivers much to be thankful for in the wallet department, may actually prove to be radically different from the summer which preceded it. According to both the Energy Information Administration and private oil companies such as Exxon, the cost of filling the tank will be much lower than might have been expected. The EIA is forecasting a maximum price peak of $2.30 per gallon, with the national average settling around $2.23 per gallon. This translates into a mere $0.18 per gallon price increase compared to the current national average. Diesel prices are also predicted to possibly drop below gasoline on a per-gallon basis.
What has changed to keep fuel costs so much more reasonable than they were a mere 12 months ago? A slow economy is certainly an important factor, but one of the single biggest reasons behind the drop has been driver behavior. High gasoline prices caused many car buyers to purchase more fuel efficient options than they may have pursued had the cost of fuel remained inexpensive in 2008. More significantly, Americans have changed their driving habits. In the past 2 years, a larger percentage of the population has chosen to investigate alternative fuels, begun to use public transportation on a more regular basis and simply stopped driving nearly as much as they used to. Demand for fuel appears to have peaked in 2007, with steady drops in overall consumption since then - drops that the oil industry has stated they don't feel will be recuperated.
In a twisted paradox, low gasoline prices actually work against the development of environmentally friendly vehicles. Automakers saw a clamoring for fuel-efficient and green automobiles when fuel costs had shot through the roof, but demand gradually tapered off as the price at the pump fell. This removes much of the incentive for major car companies to develop alternative fuel vehicles, as the technology involved is expensive to both develop and build on a large scale. The federal government has sought to prod automobile manufacturers along by raising CAFE standards and funding research, but lower fuel costs have already caused delays and uncertainty surrounding the launch of plug-in hybrid technology from General Motors. This is in large part due to tepid consumer interest in paying a premium for these types of vehicles in the face of affordable gasoline.
Low gas prices won't kill the dream of emissions-free vehicles roaming American highways, but it is certain to instigate yet another shift in the car buying habits of the general population. The pendulum has begun to swing back towards larger, thirstier vehicles, and over time this will lead to yet another climb in fuel costs. The chance exists for new car buyers to break the cycle by voting with their dollars for efficient, advanced and forward-looking vehicles.
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